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Author: SABAHCAT Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121146  
Subject: Don' want to "Buy a Dividend" Date: 11/1/1998 5:30 PM
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I am ready to purchase an S&P index fund and I understand the concept of timing the buy to avoid "buying a dividend", however, does this apply to capital gains as well?

If I buy in December just before the capital gains are recorded, will I be "Buying a capital gain" and therefore be better off waiting till the beginning of next year to buy?

Any and all answers are greatly appreciated.

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Author: Bob78164 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6056 of 121146
Subject: Re: Don' want to "Buy a Dividend" Date: 11/1/1998 8:10 PM
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SABAHCAT writes:

I am ready to purchase an S&P index fund and I understand the concept of timing the buy to avoid "buying a dividend", however, does this apply to capital gains as well?

If I buy in December just before the capital gains are recorded, will I be "Buying a capital gain" and therefore be better off waiting till the beginning of next year to buy?


I reply:

Yes, the concept of buying a dividend also applies to capital gains, although I would hope those would be relatively small in an index fund. You probably don't need to wait until January to buy in, though. The ex-dividend date is usually in mid-December, and can be found in the prospectus. The prospectus also will give you the historic capital gains for your fund, so you can better decide whether missing out on two months of market action is worth the capital gains hit you will take. Good luck! --Bob

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